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What I’ve Learned: Growing Latino Businesses When Banks Won’t

AGE: 31

HERITAGE: Mexican-American

HOMETOWN: Los Angeles, CA

OCCUPATION/TITLE: CEO, Co-Founder

Sean Salas is the CEO and Co-Founder of Camino Financial, a credit marketplace helping under-banked small businesses access capital with a focus on servicing the fast growing Hispanic business segment. Sean has worked in private equity, investment banking and throughout his career has structured over $1.2 billion in debt financings.

What attracted you to the finance side of business?

I wanted to help small businesses because I saw my mom’s successes and struggles with her own business. I was 12 years old when my mom closed the doors of her business – she had run a successful chain of Mexican restaurants for 25 years, opening over 30 stores, and then it was over. I didn’t really understand what her struggles were, I only knew I was this young kid who didn’t speak Spanish and I was moving to Mexico. But I always thought, “Wouldn’t it be amazing to get a strong business foundation and ultimately help other small businesses?”

Did that move drive you toward success?

I clearly remember pulling out of the house in a stuffy old van and moving to Mexico, I remember the smell! From that moment on I had a chip on my shoulder – I was born in Beverly Hills, lived by movie stars, so I felt weird, didn’t understand what happened and there I was, newly transplanted to Mazatlan. That first year was a struggle but growing up there from when I was 12 was a blessing in disguise. My twin brother and me were the youngest of six kids and we were the only ones who got the Mexican experience. That’s where I got my core roots as a Mexican – though I do consider myself Mexican-American – always with the desire to come back to the U.S. to pursue the American Dream.

We asked mom for just two things: a laptop and a ticket to the U.S. and promised we’d figure it out from there. Luckily we got into U.C. Berkeley where I got a BA in Political Economy of Industrial Societies, funded with scholarship and grants using our American citizenship. Long story short, we got ourselves through college without paying much from a loan perspective but from day one it was, “How am I going to pay for this?” so there was this sense of needing to think creatively. I worked 20 hours a week to pay for school and then at that point I knew I wanted to do business because of my mom and out of necessity because I knew that was a way to make money.

You worked at top firms like UBS and ICV Partners, how did you make your way back to serving small businesses?

I was really lucky to have connected to the Latino Student Business Associationat Berkeley and that led me to join affinity groups at the companies where I worked. I quickly came to the realization that there weren’t a lot of people who looked like me in that environment and I saw the kind of impact I could drive.

At ICV Partners I became involved with a new dimension of business based on the premise of investing in inner-city communities and working with underserved minorities. I came out of that experience well prepared and asked myself: “Am I willing really to put my own money at risk and live with this sort of investment?” I did a lot of research and found that there was a huge opportunity to nail that market so I took a two-year hiatus during which I went to Harvard Business School and thought about how I could incubate and accelerate small businesses.

Why is it so hard to make inroads into underserved communities?

There are a lot of reasons. Banks struggle to deploy capital to small business. For one, there’s a lot of risk involved with small businesses, a lot of times the credit history isn’t there and there can be mountains of paperwork even for smaller-dollar loans. But with new technology, it’s easier to find alternative sources of capital and to underwrite loans and deploy capital with simplicity and speed.

There is a lack of resources for small business owners, especially minority ones. That’s where Camino Financial is really different from other alternative lenders. We harness relationships with clients – we don’t deploy capital in isolation, we’re providing technical assistance, too. For instance, a lot of times we’re helping businesses complete all the bite-sized tasks necessary to get on a path to getting a bank loan or to get out from under a predatory loan they might have fallen into.

Do you work only with Latinos?

It’s very important to us to highlight our work with the Hispanic community but there’s nothing explicitly Hispanic about what we do.

What are your words of wisdom to young entrepreneurs who are on the cusp of being ready to scale up?

I’ve had the pleasure of putting myself in entrepreneurs’ shoes and business owners’ shoes, raising venture capital and understanding that only around 1 percent of VC goes to Latinos and that 1 in 5 entrepreneurs are Latino.

With that perspective in mind, I’ll say that if you think you’re ready, first you should go talk to somebody who’s done it before. There aren’t many of us, but you’d be surprised how open we are to young Latinos who want to learn.

Second, go look for the experience and get a strong foundation – any training you can get makes you more credible when it comes time to raise capital. One of the problems we have is that it’s really hard when you’re young and almost impossible if you don’t have the experience at execution.

People tend to think they need a ton of capital to get off the ground and there’s so much more beyond that to make a business successful. At Camino our minimum requirements are that you have to be in business and operational for at least one year, and be able to show at least $100,000 revenue per year. At that point you know there’s a business there – no one can have $100,000 in revenue within a year if there not engaged in real business. If you meet those two criteria we’re definitely having a conversation.

Bottom line: If you don’t have experience at executing you have zero chance at the credibility you need to raise capital. I do hear very often – more often than I’d like – “I have this great idea, I just need the capital.” That’s a non-starter. You have to tell me about your experience doing it – there are no short cuts to entrepreneurship.

This article was originally published in NBC Latino and written by Esther J. Cepeda.

Esther J. Cepeda is a Chicago-based journalist and a nationally syndicated columnist for The Washington Post Writers Group. Follow her on Twitter, @estherjcepeda.